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Intel predicts wide impact from Apple partnership

Apple’s new partnership with Intel will have far-reaching effects, not just for the two companies, but throughout the tech industry, an Intel spokesman told MacCentral.

“The dynamic will be different in the marketplace overall,” said Chuck Mulloy, Intel’s corporate spokesman. “Apple has pushed the envelope historically—that competition to push is good for consumers and good for the market in general. It will reinvigorate the amount of innovation out there.”

Mulloy’s comments came amid a wide-ranging interview at the company’s Santa Clara, Calif., headquarters that touched on Intel’s manufacturing capabilities, the company’s ability to lower the power consumption in its chips, and what processors might appear in Apple’s hardware starting next year. (Intel remains mum on that last point.) But mostly, in the wake of Apple's surprising announcement that it would drop its long-time chip partner IBM in favor of occasional adversary Intel, Intel officials stressed the similarities between their company and the Mac maker.

Apple has taken the lead in pushing technology such as USB, FireWire, and wireless networking -- Intel says that type of innovation is what it strives for as well.

“It’s a very good fit,” Mulloy said. “Apple has a track record of being the most innovative PC company, and we think we are very innovative as a semiconductor manufacturer.”

64-bit chipsets, 90-nanometer technology and Dual Core

One of those innovations pushed by Apple is 64-bit processing, a technology that lets you address more memory than with standard 32-bit chips. In promoting Mac OS X Apple has touted the benefits of 64-bit processing for handling heavy-duty tasks.

Complementing that, Intel has 64-bit chips in its arsenal. The Pentium D Dual Core—a derivative of the Pentium 4—and the Itanium both offer 64-bit capabilities, according to Intel. The company would not say whether Apple would use one of these chips or a completely different model.

Intel currently uses a 90-nanometer process in manufacturing its chips. In fact, Mulloy said that Intel has “more 90-nanometer chips than anyone else.” That’s likely of interest to Apple, which a year ago, cited unforeseen challenges of moving to a 90-nanometer process in explaining why a promised 3GHz Power Mac G5 hadn’t shipped.

Lowering the nanometer technology gives chip designers the option of making chips smaller or keeping a processor the same size and adding functionality. The problem with just boosting clock speed alone, Mulloy explained, is that it gets to the point where you can’t cool it. Indeed, Intel built its Pentium M using the 90-nanometer process so that it could have the choice of boosting the clock speed or adding more functionality and lowering power consumption.

This is where Intel also adopted Dual Core. With a Dual Core chip, you basically use two microprocessors on the same piece of silicon. A single Dual Core chip looks to the operating system like it’s two chips, giving you greater performance. While there isn’t a 2x boost using Dual Core, you still get a significant boost—of course, the same principle applies when using multi-core designs, although there is a point of diminishing return on the performance.

While semiconductor manufacturers strain to handle the burden of using the 90-nanometer technology to produce chips, Intel is already looking far beyond that threshold. Currently, Intel has 90-nanometer manufacturing facilities in Oregon, New Mexico and Ireland. However, by the end of 2005, the company will already move on to the next manufacturing process.

Later this year, Intel will start up a converted factory in Arizona that will churn out chips based on a 65-nanometer process. Another plant in Ireland will follow next year manufacturing the same chipsets.

“As people just start rolling out 90-nanometer, we are about to do 65 [nanometer],” Mulloy said.

Intel is everywhere

Those plants in Oregon, New Mexico, Arizona, and Ireland only provide a glimpse at Intel’s manufacturing reach. Mulloy said that Intel has 14 wafer fabrication facilities around the world and will spend $5.5 billion in capital and close to $5 billion in Research and Development this year alone.

“We have more manufacturing capacity dedicated to microprocessors and chipsets than anyone else in the world,” Mulloy said.

While the company attained much of its fame—and much of its revenue—from the PC business, when it comes down to its simplest component, Intel is not just about PC chipsets.

“We are a manufacturer and have been since we were founded,” Mulloy said. “We make semiconductor components of the highest quality and higher volumes than anyone else and we can turn that manufacturing machine in any direction we need to very rapidly compared to others.”

In January of 2005 Intel went through a restructuring that affected up to 50 percent of the company’s employees as they moved to a platform organizational model. This put many similar technology groups under the same umbrella, allowing them to share relevant technologies easier than was previously possible.

Currently Intel is broken up in five main groups: Digital Enterprise group, for servers, desktops and wireless products; Digital Home, an emerging group that focuses on taking devices and making them work together in the home; Mobility Group, which focuses on all things wireless, including PDAs, cell phones and computers; and Digital Health, focusing on technology to improve healthcare.

“If you have a cell phone, there is a better than 70 percent chance you have Intel Flash memory in it. If you have one of the newer PDAs, there is probably a 75 to 80 percent chance that there is an Intel processor in it. And Intel components are even in the ABS systems on your car,” Mulloy said. “We are the world’s largest semiconductor manufacturer—we have a reputation based on microprocessors, but we have a very broad portfolio and we are continuing to push that.”

Where does Apple fit?

Intel has been talking to Apple for many years, trying to get the computer-maker to switch from a PowerPC processor to an Intel-based model. Finally winning Apple’s business has been a satisfying accomplishment for Intel

“It’s always good to get a new customer, but it’s even better to get one that you have been working on for this many years,” Mulloy said.

Intel typically partners with its OEMs like Dell to help in their advertising efforts. While helping the OEM, the ads also market the Intel processor. Mulloy wouldn’t comment on whether the Apple/Intel deal announced this week would include any kind of co-marketing plan.

“Apple has one of the top brands in the world, and I’m sure they will do what they need to be consistent with what people have come to expect from them,” Mulloy added. “The key for us is to give them what they need for them to be successful. What they do with respect to marketing is going to be their call—far be it for us to tell them how to manage their brand.”

Historically, Apple is one of the most secretive companies in the technology market, choosing to make a big splash when Steve Jobs takes the stage during one of his keynote speeches, rather than pre-announce products. Intel, on the other hand, opts for a less secretive marketing approach. Intel plans to continue doing business the way it always has.

“We will market our products the way we normally do,” Mulloy said. “Apple, like any other OEM, will choose the parts the want to use and then it’s completely up to them how they will roll their products out.”

When Intel does a launch, it ships the processors in volume and makes sure companies are able to ship products based on those processors immediately. In some cases, an OEM may not choose to ship products based on a certain chip, Mulloy said, but Intel makes sure everyone has the choice.

“Launch for us in microprocessors is that we ship in volume. How that plays with Apple is up to Apple,” he said. ”They can announce it or not announce it; we just make sure it’s available to everybody.”

Update: Corrected information on how the operating systems sees a Dual Core chip. 8:56 pm ET

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